CITY
OF PEWAUKEE - TLX Technologies has found its key to success in
developing advanced technologies that no one else is creating so
not only can the solenoid valve company ask top dollar for its
products, it was also able to weather the economic downturn a
few years ago.

TLX Technologies founder and President Neil Karolek said when he
is approached by another company wanting TLX to create a
component based on something already on the market, he responds
by asking for the program they can’t do.

The beginning

TLX Technologies has a quintessential success story. Four guys
creating a business plan and product in the basement and dining
room in 1996 followed by a struggle to get footing on the market
and eventually landing enough contracts to allow the company to
hire about 55 to 60 employees and to build a second facility in
China.

Karolek said the initial product designed by TLX Technologies in
1996 was a valve that would control the inflation of an air bag,
causing it to inflate at a rate proportionate to the person
sitting in the seat. The intent was to decrease the number of
children who were killed by the great force of an air bag.

Just as they were getting their business plan off the ground,
the U.S. government made it mandatory that air bags would be
depowered by 30 percent, which improved the safety for a child,
but decreased it for a larger adult.

“Our business plan evaporated,” Karolek said.

Neil Karolek, president of
TLX Technologies talks about the process that led to the
company establishing a facility in China during an
interview Wednesday.Charles Auer/Freeman Staff

So the founders reinvented their business plan to include
technology marketable to other industries — such as fire
protection, industrial and general consumer — and went before
their investors again. From there, they attempted to get clients
and contracts, which proved to be difficult.

Karolek said it was common for them to hear “I like your
technology, but I can’t give you the order at that volume.”

One early proprietary program created that is still in use
today, is a hot and cold melt adhesive dispensing valve program.

It was a deal with Harley-Davidson for a couple of programs that
opened the floodgates, Karolek said, because they were now able
to get the attention of the automakers and achieve that critical
mass production.

Expanding into China

Recently TLX Technologies began to set up shop in China in order
to build custom solenoids and solenoid valves for Asian clients.
Karolek felt it was important to be nearby in order to meet
their needs in a timely fashion and to grow the business.

When Karolek approached the Board of Directors a few years ago
about his idea to build where the products are needed, he was
met with trepidation from the board.

“I knew if we were going to be a player, we would have to be
there,” Karolek said of China.

After convincing the board of the advantages of opening a
facility in China and informing them how TLX’s intellectual
property would be protected, Karolek was given the green light.
After discussing the company’s plans with economic
development heads for four Chinese cities, it was determined the
best fit would be the same city Land Rover and Jaguar were
already operating in.

Karolek said the plan is to keep the technology at the City of
Pewaukee headquarters, explaining he doesn’t want the design
work focused in China. So while people will be employed in
China, the profits will return to the United States, Karolek
said. In addition, more people will be hired at the City of
Pewaukee site in order to support the Chinese programs.

He isn’t too worried about TLX’s technology being copied in
China because it’s much harder to duplicate than say, a BIC
pen.

TLX Technologies’ China facility should be up and running with
a small program in May, Karolek said. A second program will
likely be added in 2016 and then the facility should be able to
produce 200,000 to 300,000 solenoids by the middle of 2017.

For many, opening a facility in China may be daunting, but
Karolek said there are numerous resources available, such as the
Wisconsin Economic Development Corporation and the U.S.
Department of Commerce.

When TLX Technologies was looking to expand exports to Europe,
the U.S. Embassies were able to help locate a potential
representative. The person TLX hired helped them to get work
with Mercedes.

“Businesses that export have a leg-up on almost everyone else
in the world,” Karolek said, adding they are better to handle
economic cycles and have added to value to the company’s
overall worth.

Continued growth

The past couple of years have seen significant growth for TLX
Technologies. In 2014, the company grew 15 percent, Karolek
said, and is predicted to grow 18 percent this year.

This week they were one of the companies nominated by Wisconsin
Manufacturers & Commerce for a Manufacturer of the Year
Award.

“During the first 10 years, there were times I didn’t know
if we would make payroll,” he said. TLX Technologies
made it through those early lean years, and even the Great
Recession. From 2008 through 2010, TLX’s production was down,
but large companies were still investing in new technology,
Karolek said.

“Now I’m worried about growing the business too fast,”
Karolek said. It’s important to temper the entrepreneurial
dream with reality, he said.

Tips on opening up a foreign business
facility:

-Identify if there is a
market in that country for your product.

-Find out if the market
is regional or national.

-Take advantage of
resources offered by the U.S. Department of Commerce, Wisconsin
Economic Development Corporation and Wisconsin Manufacturing
Extension Partnership. Grants are available through the U.S.
Department of Commerce.

-Make sure a tier one
supplier is already in the country and selling their products.